BANKING AFFAIRS

Detailed explanation-1: -Banks with a net NPA ratio of 6-9 percent will fall under risk category 1. Lenders with net NPAs between 9-12 percent of all loans fall into the second risk category, while those with a net NPA ratio above 12 percent fall into the third category.

Detailed explanation-2: -Stress tests under baseline scenario suggest that gross NPAs of banks are expected to fall to 4.9 per cent by September 2023 from the current 5 per cent as of September 2022.

Detailed explanation-3: -Banks are required to classify nonperforming assets into one of three categories according to how long the asset has been nonperforming: sub-standard assets, doubtful assets, and loss assets.

Detailed explanation-4: -NNPA: NNPA stands for net non-performing assets. NNPA subtracts the provisions made by the bank from the gross NPA. Therefore net NPA gives you the exact value of non-performing assets after the bank has made specific provisions for it. NPAs can also be expressed as a percentage of total advances.

Detailed explanation-5: -NPA is calculated by dividing the non-performing assets by total loans will give the NPA ratio in decimal form. Then, multiply it by 100 to get the NPA percentage. Suppose the total amount of loan provided by a bank is ₹20, 00, 000. NPA percentage = 0.05X100 = 5%.